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The realty market dislocation brought on by Covid-19 has resulted in unique possibilities. Opportunistic assets are available in logistics and data centres, say realty managers, as well as enviable opportunities are available in the residential segment and hospitality space.
During 2019-Q1 2020, Colliers, a realty investment management company, witnessed ₹5,778 crore ($754 million) of investment inflows into the hospitality real estate sector in India, with most of it involving distressed asset trade transactions. The agency points out this is nearly eight times the hospitality sector investment volume recorded in the preceding five quarters.
The agency has projected PE investment inflows in Indian realty halving to $3.5 billion this year against $6.4 billion recorded in 2019. “Opportunity lies in logistics and data centres as well as core commercial office assets,” says Sankey Prasad, Chairman at Colliers International India.
Distressed assets, especially in the hospitality and retail space, are also attractive, adds Prasad. “Opportunistic asset trade transactions are expected to gain pace in the next 2-3 years with the current economic slowdown,” adds the official.
Colliers has witnessed increased investor focus on acquiring opportunistic assets in India. In a report, the agency has urged investors to scout for assets in data centres and warehousing and logistics, “given the strong potential in terms of cloud infrastructure, and robust domestic demand.”
Distressed assets in hospitality and retail space could also offer attractive valuations, states the report, as would core commercial office assets that have become more lucrative with compressing cap rates.
Other projects
The report highlights other opportunistic investments such as acquisition of completed residential projects and equity in under‐construction residential projects with Tier-1 developers.
Colliers’ report states the slump in international oil prices is likely to benefit the economy, in the form of lower current account deficit, lower inflation and lower fiscal deficit.
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